In Focus: Summer 2021

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After the last 18 months, looking ahead is very appealing to many of us. However one critical area of future financial planning is often overlooked.

Since the inheritance tax (IHT) threshold is now frozen for the next five years, many more estates will be subject to the tax. Our feature looks at the current rules surrounding IHT, what you can do now to mitigate your liability and possible changes coming in the future. Such forward tax planning can also make a difference in the short term.

Ensuring that you and your partner make the most of existing tax allowances and reliefs can make a difference to your family finances as we also explore. And we look at keeping on top of portfolio management – both the importance of active reviews in maintaining the diversity of your investments, and understanding what some of the ‘green’ labelling on increasingly popular sustainable investments really means.

Click here to read the Summer 2021 issue of In Focus.

In Focus: Spring 2021

3A year after the Covid-19 pandemic took hold, the careful and gradual moves out of lockdown are hopeful. The impact on the economy, both short and long term, is yet to play out, but there are some planning lessons for individuals that we can take from the last year.

Some of these will be affected by the spring Budget. Chancellor Rishi Sunak was under pressure to continue pandemic support measures, but has also set out tax freezes to come which will begin to replenish the country’s coffers. Meanwhile, families may well have focused on their financial well-being, including where they choose to invest.

With environmental, social and governance (ESG) funds reporting significant increases, we look at how they have become more mainstream in their cross-generational appeal. And for those focusing on retirement, while the state pension increases in line with the triple lock, we look at what £1 million is really worth long term.

Click here to read the Spring issue of In Focus.

Image Courtesy of Flickr_Ishan Manjrekar

Budget Snapshot: March 2021

The Budget Statement was delivered today shortly after 12.30 this afternoon by the Chancellor of the Exchequer, Rishi Sunak.

This Budget takes place after a year that has seen the largest drop in annual national output since the Great Frost of 1709, Europe’s coldest winter in the last 500 years.

About the Budget

The Budget is presented each year by the Chancellor to Parliament and the nation and sets out how much the Government will spend and borrow and how much tax is to be collected.

This snapshot gives you a quick summary of the key points announced by the Chancellor from the dispatch box.

More details are available from GOV.UK.

Main Headlines from the Speech

Introduction

The Chancellor describes this Budget as a three stage plan to help the recovery of the economy through the crisis and beyond:

  • ‘Continue support through this moment of crisis’;
  • Begin ‘fixing the public finances’; and
  • ‘Begin the work of building our future economy’.

 

Coronavirus support

  • Job Retention Scheme extended until end of September 2021.
  • Employees will continue to receive 80% of their wages and employers to contribute 10% in July and 20% in August and September.
  • Self-employed support scheme extended until September 2021.

-Access to be given to self-employed who have filed a tax return by 2 March 2021.

-February to April grant to be worth 80% of three months’ average trading profits and capped at £7,500 in total.

-May to September grant to be more focused with value of grant to be determined by a turnover test.

  • Universal Credit £20 uplift extended until end of September 2021.
  • One-off payment of £500 to be made to eligible Working Tax Credit claimants.
  • Recovery Loan Scheme to be launched from 6 April 2021 to provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million. Scheme will be open to all businesses, including those who have already received support under existing coronavirus loan schemes.
  • Restart Grants to be made available in England of up to £6000 per premises for non-essential retail businesses and £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
  • VAT Deferral New Payment Scheme will allow any business that took advantage of the original VAT deferral in 2020 to pay deferred VAT in up to eleven equal payments from March 2021.
  • Business rates reliefs to continue for eligible retail, hospitality and leisure properties in England. 100% relief from 1 April 2021 to 30 June 2021. 66% relief from 1 July 2021 to 31 March 2022.

 

Housing

  • Mortgage guarantee scheme to be launched in April 2021 which will provide a guarantee to lenders offering mortgages to people with a deposit of just 5% on homes with a value of up to £600,000. The scheme will run until the end of 2022.
  • Temporary Stamp Duty cut to be extended until 30 June 2021. From 1 July 2021, the Nil Rate Band will reduce from £500,000 to £250,000 until 30 September 2021 before returning to £125,000.

 

OBR economic forecasts

  • OBR expects size of the economy to be back at pre-pandemic level in mid-2022 but that it will be 3% smaller in five years’ time that it would have been if the pandemic had not happened
  • Growth

2021: 4.0%

2022: 7.3%

2023: 1.7%

2024: 1.6%

2025: 1.7%

  • CPI Inflation

2021: 1.5%

2022: 1.8%

2023: 1.9%

2024: 1.9%

2025: 2.0%

  • Borrowing forecast (not expressed in cash terms)

2021/2022: 10.3%

2022/2023: 4.5%

2023/2024: 3.5%

2024/2025: 2.9%

2025/2026: 2.8%

  • Unemployment to peak at 6.8% in 2022 – 1.8 million less people expected to be unemployed than previously forecast

 

Personal taxes and pensions

  • Income tax personal allowance to rise to £12,570 and higher rate tax threshold to £50,270 in 2021/2022 and then remain unchanged from 2022 until April 2026.
  • NIC thresholds to rise in 2021/2022 (Primary threshold to £9568, Upper Earnings Limit to £50,270) and then remain unchanged until April 2026.
  • CGT annual exempt amount to remain unchanged at £12,300 until April 2026.
  • IHT nil-rate band and residence nil-rate band to remain unchanged at £325,000 and £175,000 until April 2026.
  • Pensions lifetime allowance to remain unchanged at £1,073,100 until April 2026.
  • ISA and JISA subscription limits to remain unchanged in 2021/2022.
  • National Living Wage to increase to £8.91 an hour from April.

 

Corporate taxes

  • Corporation tax to rise to 25% in April 2023 on profits over £250,000.

-Corporation tax will remain at 19% for businesses with profits of £50,000 with a taper on profits between £50,000 and £250,000.

  • From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery will get a 130% first-year capital allowance (super deduction).
  • VAT threshold to remain unchanged at £85,000 until April 2024.

 

Excise duties

  • No increase to alcohol or fuel duties.

 

Environment

  • Sovereign green bond (green gilt) to be issued this summer with further issues later in the years. Minimum value of issue will be £15 billion.
  • Green retail NS&I product to be made available in the summer of 2021. This product will be closely linked to the sovereign green bond.

 

Infrastructure

  • UK Infrastructure Bank to be established in Leeds and provide financial support to private sector and local authority infrastructure projects across the UK which help meet government objectives on climate change and regional economic growth.
  • Freeports to be established at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.

 

If you have any questions please do not hesitate to contact Jonathan Kelly on 07713 098 595.

Image courtesy of Flickr_Sheila Sund

Introducing our chosen charity for 2021: Polio & Children in Need Charity (PACINC) helping Kigezi Orphans

Constructing an orphanage to house and school orphaned children in Kabale, Western Uganda. 

Kigezi Orphan Children’s Charity (KOCC) was formed in 2014. The orphanage provided shelter for these abandoned children, but the dwelling was sparse and unhygienic. The children regularly battled with infections and disease due to the unsanitary conditions. In 2017, the building’s owner gave the founder of the orphanage an eviction notice.

Polio and Children in Need Charity(PACINC) then took on the initiative to move these children and house other abandoned kids in a new boarding home. The project involves construction of two dormitories for 84 children, bathroom and toilet facilities, a security fence all around the campus and a school for over 200 children. Staff will be hired  to educate and take care of these children.

Currently, Polio and Children in Need Charity has been successful in securing sufficient land in western Uganda for the new site where construction for an orphanage and school has already begun.

To find out more and donate ‘click here’ or complete this form (pdf) and return it to us.

Join us to change the lives of 84 orphans – sponsor an Orphan in Kigezi (Uganda)

The little you give helps a lot

Our mission this year is to help Kigezi Orphans Children’s Charity change the lives of 84 orphans. You can find out more about the charity and their work here. We are sure you will see why we have chosen Kigezi as our charity this year and if you would like to join us on this remarkable and touching project, please get in touch.

£300 (£25 per month) will help sponsor the annual cost of accommodation and teachers salary for one child, PACINC has Zero administration costs so your entire donation will go towards the sponsorship of an orphan.

PK Partnership cost of financial advice

Covid-19 Measures: Updated to 5 January 2021

As the third Covid-19 lockdown took effect on 5 January 2021, the Chancellor announced a further £4.6 billion in grants to the retail, hospitality and leisure sectors. This new round of support follows extensions to the job retention and loan schemes revealed on 17 December 2020. There may be more to come with the Budget on Wednesday 3 March 2021.

New lockdown 3.0 grants

An extra £4.6 billion in lockdown grants has been directed at the worst affected sectors.

New one-off grants for closed retail, hospitality and leisure businesses have been announced. The new grants are in addition to all other forms of support, such as the Lockdown Restrictions Support Grant (LRSG (Closed) Addendum) which applied to businesses that were forced to close between 5 November  and 2 December 2020.

The new grants in England will be:

  • £4,000 for businesses with a rateable value of £15,000 or under;
  • £6,000 for businesses with a rateable value between £15,000 and £51,000; and
  • £9,000 for businesses with a rateable value of over £51,000.

In addition, £594 million is being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the above grants, that might be affected by the latest restrictions. Businesses should apply to their Local Authorities.

The Devolved Administrations will be receiving additional funding in line with the English measures, with £375 million for Scotland, £227 million for Wales and £127 million for Northern Ireland.

The announcement of the new grants talks of helping business “through to the Spring”, with the Chancellor hinting that additional support measures are to come in the Budget on 3 March 2021.

Coronavirus Job Retention Scheme (CJRS)

The CJRS furlough scheme is now running through to April 2021.

On 17 December 2020 the Chancellor announced a further one-month extension of financial support under the Coronavirus Job Retention Scheme (CJRS) to the end of April 2021. As currently, the government will pay 80% of the salary of employees for hours not worked up to a maximum of £2,500. Employers will only be required to pay wages, National Insurance Contributions (NICs) and pensions for hours worked; and NICs and pensions for hours not worked.

Claims for furloughed employees can only be made for those who were employed and on payroll on 30 October 2020. The employer must have made a PAYE RTI submission to HMRC between 20 March and 30 October 2020, notifying a payment of earnings for that employee. This may differ where an employee has been made redundant, or they stopped working on or after 23 September 2020 and have subsequently been re-employed.

Self-employed Income Support Scheme (SEISS)

No change.

No changes to the SEISS were announced alongside the CJRS extension, as the SEISS already runs through to the end of April 2021. Details of the fourth SEISS grant that will cover the three months from February to April have not yet been released.

Loan schemes

Most schemes extended to 31 March 2021.

On 17 December the Chancellor extended access to the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) until the end of March.

Additional support measures

In November 2020 the Financial Conduct Authority (FCA) published fresh guidance across a range of issues including mortgages and consumer credit and loans. The thrust of these was to limit the maximum payment holiday to six months, which had to be agreed three months at a time.

If you have any questions please do not hesitate to contact us.

PK Partnership cost of financial advice

In Focus | Winter 2020

In Focus Winter 2020

As we come to the end of this difficult year, the effects of the pandemic are still playing out. While there is good news on the efficacy of vaccine trials, there is still some way to go before we regain a sense of normality.

Many have seen a dip in incomes, with both investment and pension portfolios affected by market turmoil over the year. We look at the need for ensuring your portfolio is suitably diversified, as well as the impact on retirement plans. Elsewhere savers have been hit by interest rate reductions, while pandemic confusion has seen a huge rise in fraud schemes and scams.

One way you can take some control, however, is in your year end tax planning, making the most of your reliefs and allowances before expected tax changes in the spring.

Click here to read the latest issue of In Focus.

 

Image courtesy of Flickr_Sheila Sund

Beat the scammers

Investment and pension scams are becoming ever more sophisticated, from fancy fake websites to the ‘cloning’ of authorised businesses. Rule number one is always to reject unexpected offers.

Rule two is that, if it looks too good to be true, it probably is. If in doubt, check the FCA ScamSmart site (www.fca.org.uk/scamsmart) and ask our advice.

Image Courtesy of Flickr_Ishan Manjrekar

Rupees, Pounds or Dollars? The Asian Art Market in Review

Guest blog from one of our preferred valuation partners, Doerr Dallas Valuations.

Author: Laura Williams, Indian Art Specialist.

Nobody anticipated the extreme highs of the past few weeks. Particularly in what may potentially be the worst recession of our lifetime. In Mumbai, the room was devoid of clients but that did not alter the fact that the most expensive artwork by an Indian artist had just been sold. There must have been a smile underneath the masks of Dadiba & Khorshed Pundole. The owners of Pundole’s Auction House had just sold a painting by V S Gaitonde on the hammer, for just over £3.6 million pounds. Years of hard work paid off. The record had been set.

With hardly time for the world-record Gaitonde to be taken off its nail, down the road and hot on its heels, Mumbai’s other leading auction house Saffronart was putting up its remarkably similar work, again by V S Gaitonde. Celebrating twenty years of Auctioneering, the Vaziranis pulled out all the stops and without a single-owner collection had pulled together a strong selection of works by leading practitioners. The hammer at Saffronart, like an echo across the City, came down on the Gaitonde, just short of the recent record. Those used to the big-buck rooms of the International art world may give a conciliatory nod to these figures. But consider that in 2013 the same Gaitonde artwork could have been picked up for around £500k and in 1980 it may have cost a modest £500. Oh, how collectors of South-Asian art, like all aficionados, must wish for a time-machine.

For a few years the name Gaitonde has been like dangling a golden carrot in front of the noses of collectors. Equally exhilarating, at the same sale at Pundole’s was the sale price of close to £1million pounds for a work by J S Swaminathan. And it has been the same story for the past few, lockdown, months. The Insta feeds of the auction houses flash at almost the same speed as the rise of the announced prizes, declaring, ‘The highest price achieved for the artist’. The party we are invited to appears to be getting bigger and the list of names added to its celebrity artist list is expanding.

When India embraces an idea, it does so with full gusto. Particularly when it comes to investment potential. ‘I know a great street-food chef’ can transform in the blink-of-aneye into, ‘Business Woman Launches her 200th Food Truck!’ Likewise, a Zarina print can quickly morph from a £10,000 estimate into a £50,000 artwork – as seen at the recent sales. According to Rob Dean, Director of Pundole’s, ”The market may currently be inflated due to worldwide lockdowns but do I think the South-Asian art market is set to be one of the biggest markets in years to come? Yes, I do”.

You could have heard the proverbial pin drop at this week’s Sotheby’s sale of Modern and Contemporary South-Asian Art in London. Lot 40 by Indian artist Bhupen Khakhar made a dazzling £2 million pounds (inc premium) against a suggested price of £250,000 – £450,000. The wide-ranging estimate, a great pointer to the fact that even the experts are not quite sure where the star pupils sit. But the sound of the hammer sadly sounded hollow, just a few lots later, when the stunning oil on canvas, a 1969 work by the much loved V S Gaitonde, failed to sell. The story was the same earlier in the month, when a similar canvas by the same artist also failed to get off the starting block at Christies in New York. The significance of right place, right time and knowing the difference, for each artwork, is evidently crucial.

What does this tell us? The primarily domestic, South-Asian, art market is clearly happier spending its rupees than its pounds or dollars. Perhaps most encouraging, is that a discerning eye appears to be coming into play. Take a tale of two paintings by the respected artist N S Bendre. Two poor examples appeared in Sotheby’s sale, one scrapping past its low estimate of £15,000, the other fai led to sell. Whilst two canvases, of a similar size and year, strong works, sailed past their estimates to achieve around £110,000 and £148,000 each, including premium, at the Saffronart

Auction two weeks earlier in Mumbai. Let’s hope this throws the ridiculous priceper-inch calculator that dealers of South-Asian Art are so fond of, well and truly out of the window and that buyers are understanding that not every Husain is a good Husain.

So, cheers for some and commiserations for others in what appears to be a market that is at last finding its feet. But in this growing arena whilst knowledge of the current sales will be of importance to the UK Insurance industry, this rising market will also mean that many owners of artworks from South-Asia are probably significantly underinsured. Art as a commodity can be tricky. We understand the process of valuation. But it is never as simple as it seems. Finding a valuer for many can be an unknown entity or simple not top of the to do list.

It is a new part of the same old story; we buy art because we love it, for investment and often secretly for both. Artworks get passed down through families, normally with a tale to tell about how Grandpa picked up the sculpture when he was in the East.

Sometimes these are cherished pieces, often tastes differ through the generations. The painting gets put on top of the wardrobe. We have all seen the faces of the owners of such artworks on the TV, being told by the expert that it is probably worth a couple of hundreds of pounds. But not so in the South-Asian, particularly the Indian, art context.

Here the roles are reversed. Pieces thought to be worth a few pounds are often valued in the thousands and beyond.

For those expats and non-resident Indians who bought artwork on their travels, it may be worth looking up from this article and scrutinising the artwork hanging above the desk, in the same place it has been for the past thirty years. Unlike our other assets we let value hide in our homes as it is the easiest option. It is rare that those left a house in a will would take a tour, exclaim its beauty, then lock the door and walk away. Like houses, art has value. In some cases, it can even exceed the value of the wall it sits on.

To arrange a confidential review of your personal insurance including art collections, high value home building and contents, wine collections, high value performance and classic cars, please contact our Private Clients Manager, Kim Shergold, on 020 8681 4994

 

PK Partnership cost of financial advice

Video witnessing for wills

The Government is changing rules to allow remote witnessing of wills via video calls in England and Wales. It is already legal in Scotland, but not yet in Northern Ireland.

New legislation in September 2020 will backdate the measure to 31 January 2020, but two witnesses will still be required. The change will last through to 31 January 2022 or as long as necessary through the pandemic.

The FCA does not regulate will-writing.

Autumn 2020 | In Focus

PK Autumn newsletter

With people starting to return to the office and schools and universities reopening, it appears that life is beginning to tentatively resume its usual rhythms this autumn. As the longer term effects of the lockdown become apparent, we look at some short term future implications of the pandemic – such as student loans and the upcoming Budget. We explore how ESG funds have been performing during the last few months and investigate whether the summer changes to stamp duties make buy-to-let a more attractive investment. We also explore how some women’s state pensions may have been underpaid. As ever, if you are affected by any of the topics, we’re here to help.

Click here to read the latest issue of In Focus.

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